budget statement 2012
TRANSCRIPT
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Budget Statement 2012
From Steady Foundation To
Economic Transformation
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CONTENTS
Introduction 4
I.
The International Context 7 Navigating the International Troubled Waters Confronting the Uncertainties
o CLICO Trust Fundo Public Service Negotiationso Domestic Buffers
II. National Security 11Integrated Approach to Crime
III. Strategy for Economic Transformation 13 Claiming New Economic Space Improving the Regulatory Environment for Private Sector Activity Looking Outward Meeting the basic Needs of our People
o Health Serviceso Educationo Housing
Improving Infrastructureo Transportationo Water
Expanding Agriculture and Tourism Respecting our Environment Addressing Youth, sports, Culture and Gender Issues Managing Our Social Safe Net Tobago Development
IV. Strategy for Growth, Trade and Investment 28 Our Investment Platform New Investment in Energy Alternative Energy Development New Maritime Economy Urban Development New Infrastructure Public and Private Partnership
o CNG Infrastructureo National Infrastructure Banko Broadband Infrastructureo Communication Infrastructure
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Capital Market Developmento Joint Public/Private Developmento Public Offeringso Small and Medium Enterprise Marketo Regional Stock Exchange
V. Fiscal Measures 371. Job Creation and Investment2. Strengthening and Improving the Financial Sector
Expansion of Deposit Insurance Coverage3. Broadening the Social Securing Net
Amendments of the National Insurance Scheme4. Energy Sector Measures5. Alternative Energy6. Tax Administration7. Amendment to the Betting Levy Board Act8. Penalty for Late Filing of Annual Returns by Companies
VI. Budget Arithmetic 48VII. Conclusion 50
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Introduction
Honourable Mr. Speaker, it is my privilege to deliver the second Budget of the Peoples Partnership
Government. I would like to start by quoting a statement made to this Honourable House on September
4 this year. The statement is as follows:
A failed state is where crime and violence becomes the norm. A lawless society takes
over driving law abiding people out. The state of emergency is not something we
picked out of the sky to break the rule of law in Trinidad and Tobago. It is enshrined
in our Constitution. The Constitution framers have given us this weapon in order to
protect the people of our land and to protect our country.
These are the inspirational words of the Honourable Prime Minister, Kamla Persad-Bissessar, as she
justified the need for the current state of emergency in our country. This was indeed a decisive and
dramatic intervention a trait that has come to characterize the leadership of our Prime Minister, who has
quickly established her credentials in the international arena.
Mr. Speaker, these inspirational words have set the stage for todays discourse, disclosures and decisions.
They will inform our Budget Statement for the fiscal year 2012.
Indeed, it is the Governments duty to protect our citizens and our country. In discharging this duty,
there was and there is a high level of expectancy by our citizens as they turned the political page and
elected the Peoples Partnership Government some eighteen (18) months ago.
At that time, as we stood on the cliff looking down and looking up. We knew that we had to fix the
economic foundation, get the arithmetic right and set the path for the turn-around of the economy. In
accepting this task, we had to muster the courage, a courage that reflected both resolve and vision.
Mr. Speaker, no one can doubt the resolve of this Government to grasp the difficult issues of the day.
Many are complex matters and the decisions are never easy. It is very difficult to overcome some of these
issues while pleasing everyone at the same time. This Government recognizes that an integral part of
success in doing difficult things is the resistance one encounters and the courage one requires in the face
of adversity.
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Mr. Speaker, we knew as a people we must ready ourselves for change, confront the issues that lie at our
door-step and mitigate the risk facing us both globally and locally. Some of our behavioural patterns
nurtured over the past must shift. Unsatisfactory levels of productivity, insensitive customer care, lack of
competitiveness, social inequity and lack of transparency must be left behind.
We must hold ourselves accountable as individuals, as families, as institutions, as civil societyand as a Government.
People must be held accountable for the past recklessness in our financial sector and theharm they have caused to many vulnerable people.
People must take responsibility for their personal investments. People must comply with regulations and tax laws. We must exercise fiscal responsibility. It is time to take responsibility for adhering to the rule of law.
During the last year, we were never cowed by the size of the challenge nor did we shirk our
responsibilities to the population. We did not seek an easy way out and neither did we skimp on our
efforts. We met the challenges head on.
We began carefully to design the architectural plans for the national economy, step by step, block by
block, as we fixed the arithmetic of our finances and set the base for a steady foundation.
Mr. Speaker, as we approached this national task, we were aware that development cannot be proclaimed,
imitated or imported; it had to be achieved by drilling down within ourselves. It must be inwardly
driven from the strength of the country itself, by unearthing our peoples entrepreneurship, talent, and
capabilities. It is time for our nation to take responsibility for its destiny.
Before I proceed, Mr. Speaker, I wish to extend my appreciation for the collective effort of my Cabinet
colleagues, who have provided analytical perspectives and policy prescriptions on the various issues. To
my team at the Ministry of Finance, my sincere thanks for the hours of hard work, meticulous researchand analytical depth. To those individuals and agencies in the private sector, the labour movement, and
civil society whose contributions have informed this Budget, I also express my gratitude.
Mr. Speaker, as we look ahead, the policy platform will focus on three priorities:
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Job creation: with projects for poverty reduction and a range of measures to close the equitygap;
Investment: which will include creation of entrepreneurial opportunities and an innovation-driven economy to stimulate growth and competitiveness through public/private investment;
and
Security: which will involve the continued implementation of strategies for crime reduction,effective containment, and a climate of law and order. It also will involve food security with
clear production targets and infrastructural support.
Mr. Speaker, at the time I presented the first Budget of the Peoples Partnership entitled: Facing the
Issues: Turning the Economy Around, confidence in the world economic recovery had begun to re-
surface, and by the first quarter of 2011, we envisaged a somewhat smooth sailing, with a certain gentle
economic wind on our backs.
Then, the sovereign debt issue currently engaging Greece and Ireland erupted creating contagion risks in
the larger countries of Europe which eroded confidence in the European fiscal system. Coming on the
heels of the political stalemate in the United States Congress and the subsequent downgrading of credit
ratings of nations including the United States, new uncertainties have arisen, particularly with respect to
jobs and growth at the global level.
Mr. Speaker, these uncertainties were transmitted to our economy through the impact on oil and gas andother commodity prices, the performance of the Caribbean region and the falling markets for our exports.
The conversation has now changed to market volatility, contagion of financial markets, lowering of
growth rates, austerity and even recession. Trinidad and Tobago must not remain an innocent bystander
to these new dynamics. We must develop a credible response to reignite growth within our economy and
search for new buffers to insulate us against external shocks.
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I. The International ContextNavigating the International Troubled Waters
Mr. Speaker, the world economy has emerged from a recession considerably weakened and still fraught
with uncertainty. The geopolitical tensions in the Middle East and North Africa, the waning of US
dominance, the debt dilemma that sprawls across the Euro zone, and the furore about currency wars have
shaken economies to their core. Mr. Speaker, crises are no longer being considered aberrations of financial
history.
Recent events in Europe seem to replicate the crisis that rocked Wall Street and felled several financial
giants in 2008 and 2009. When the US recently lifted its debt ceiling, it occasioned another bout of
heightened anxiety. The gravity of the US condition is far-reaching and may multiply in the months ahead.
In August this year stock markets tumbled, some recording their biggest decline since 2008, generating
statistical revisions, a realignment of currencies and fluctuations in commodity prices. With these new
qualms, the odds of a global recession over the coming year have strengthened.
The Greek debt crisis, resulting in the euro areas current quagmire, has laid bare the flaws in the
European welfare model, where questionable accounting disguised the true size of the debt over several
years. Similar conditions exist in Portugal, Ireland, Italy and Spain.
Regionally, uneven recoveries will persist. External current account deficits are widening and rising global
prices threaten the most vulnerable groups, requiring large adjustments in national budgets. The recent
slowdown in the US economy will have adverse effects on overseas remittances and tourist arrivals,
putting additional pressure on already fragile economies.
Mr. Speaker, against this backdrop, Trinidad and Tobagos stable economic outlook arises from stringent
measures exercised to ensure that fiscal and external debt burdens are on a more responsible path. Our
international credit rating has not faltered; most of our liabilities to the contractors have been met; some
wage-negotiations with the public service unions have been settled; most VAT refunds to the business
sector have been paid. The debt-to-GDP ratio remains relatively low and inflation fell to its lowest level in
forty-two years.
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Moreover, the near-devastating financial impact of the CL Financial/CLICO and the Hindu Credit Union
(HCU) crises has been contained and trade unions and credit unions will be paid in full in two
installments.
Confronting the Uncertainties
CLICO Trust Fund
In addition Mr. Speaker, the Government intends to establish a new entity which will issue an instrument
to holders of Short Term Investment Products issued by CLICO and BAT and mutual fund investors
with CLICO, who have exercised the option to exchange their Bonds with maturities of years 11-20. This
instrument will be equal to the face value of their Bonds at the date of exchange and would be
significantly greater in value than the value of the Bonds in the open market. This means of exchange of
the Bonds and any potential risks associated with this market based instrument will be properly explained
to investors through a sustained communication plan.
Upon completion of the process of exchanging the bonds for units, the Trust would be listed on the
Trinidad and Tobago Stock Exchange and units in the Trust can be traded within the trading structure of
the domestic capital market, similar to the other closed end trusts or funds which are currently listed on
the Exchange. The potential risk associated with this market-based instrument would be properly
explained to investors through a sustained communication plan.
Mr. Speaker, I propose to make the necessary adjustments to the Corporation Tax Act to permit the Trust
to have its income and dividends exempt from Tax.
Public Service Negotiations
Mr. Speaker, negotiations for revised salaries and other terms and conditions of employment for monthly
paid employees in the Public Service, including the Police and Teaching Services, and daily rated
employees of the Central Government, Tobago House of Assembly and Municipal Corporations for the
period 2008 to 2010/2011, began in 2010 and continued against the background of a slowdown in
recovery efforts, and fiscal and financial uncertainty.
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Notwithstanding these difficulties, settlements have been reached with the Associations and Unions
representing employees in the Civil Service and certain Statutory Authorities, the Second Division officers
of the Prison Service, and the Sugarcane Feeds Centre.
Not only have we reached agreement on wages, but in the case of the Civil Service we reached agreement
on the following two benefits:
A commitment to extent their health Insurance Plan to include coverage for the family of theCivil Servant, while striving to lessen the relative burden of the cost of the Plan to the employee;
A commitment to undertake a Job Evaluation Exercise which will bring Civil Servantscompensations packages more in line with their market values.
Negotiations are still continuing between the Chief Personnel Officer and Associations and Unions
representing officers in the Police, Prison - First Division, Fire and Teaching Services and daily-ratedworkers.
In the wider public sector, negotiations have also been concluded with a number of organisations
including the Airports Authority, University of the West Indies for Academic Staff, the Water and
Sewerage Authority and the Chaguaramas Development Authority. Approval has also been granted for
similar payments to be made to employees in the Regional Health Authorities and other organisations.
For those negotiations which are yet to be concluded for the period 2008 to 2010, it is our hope that theywill be finalized shortly, given that the negotiations are in respect of a past period. We have already
entered the 2011 to 2013 bargaining period and a new approach involving social dialoguing will be
required if the parties are to arrive at mutually acceptable settlements within the economic realities.
Domestic Financial Buffers
Mr. Speaker, our ability to withstand the impact of recession in our major trading partners stem in large
part from the presence of our financial buffers: the adequacy of our international reserves, the relatively
low levels of public debt that provide capacity to borrow in an emergency, and the resources in our
Heritage and Stabilisation Fund. These buffers have protected our nations credit rating while others, far
mightier than ourselves, have fallen prey to the weak global economy.
We maintained and strengthened these buffers in the face of significant domestic pressures from many
quarters, to put at risk the benefits from our disciplined and prudent approach.
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As a result, Mr. Speaker, I am pleased to report that at the end of September this year Gross Official
Reserves stood at US$9.7 billion, the equivalent of thirteen months of imports. As a result of its
conservative investment stance, the Heritage and Stabilisation Fund was less affected by the turmoil in
global markets than the average international fund. This fund, as at September 30th 2011, amounted to
$US4.1 billion.
Mr. Speaker, Trinidad and Tobago has made significant proposals to the International Financial
Institutions for a review of existing windows for insulating small economies from external shocks. I am
pleased to inform this Honourable House that this matter is currently being considered and an
international committee is being established to further this proposal.
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II. National SecurityAn Integrated Approach to Crime
Mr. Speaker, crime continues to be one of our countrys formidable challenges.
This Government was elected on the trust and hopes of citizens that we will bring change to this situation
and we are resolute with respect to that objective. Our Minister of National Security has displayed a
purposeful approach to tackling this situation and he is deserving of our commendation.
Mr. Speaker, the Governments approach to crime containment and reduction is multi-pronged and
involves:
more effective law enforcement and policing social interventions aimed at discouraging a lifestyle of crime and violence reform of the justice system and the legal framework; and rehabilitation of offenders.
As crime and criminal activity become more complex, priority is being given to increasing the
sophistication of the resources and systems utilised and to the effective management of Law Enforcement
Agencies. As such, emphasis is being placed on:
expanding the use of modern technology for tracking crime and ensuring connectivitybetween law enforcement agencies
capacity building and training of law enforcement officers modernisation of physical infrastructure and information management systems initiating a street and community patrol in partnership with the private security sector
beginning with 250 new motorcycle patrol officers; and
in partnership with the municipal police a City Surveillance Network Programme is to beinitiated in the city of San Fernando expanding thereafter.
The 21st Century Policing Project is a major initiative which introduces a new delivery system for policing
that builds partnerships with communities and provides a high level of customer service. It effectively
blends intelligence led proactive initiatives together with community policing strategies.
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Mr. Speaker, in recognition of the transnational and perverse financing of crime, the Financial Intelligence
Act (2009) has been amended to improve the effectiveness of the Financial Intelligence Unit in combating
money laundering as well as the financing of terrorist activities in Trinidad and Tobago.
Additionally, legislation would be brought to Parliament to strengthen the capability of the Private
Security Industry, and the Prison Rule, the Defence Act and the Evidence Act will be modified to
strengthen enforcement measures.
Mr Speaker, initiatives to stem illegal activity domestically must be complemented by actions that reduce
security threats in our airspace and maritime domains. To effectively safeguard the nations maritime
borders, greater scrutiny will be placed on containers, cruise ships and ferries as part of a comprehensive,
systematic approach to border security.
Mr. Speaker, you will recall that in the last budget we had introduced a special allowance of $1,000 per
month for officers of the Police Service in recognition of the special circumstances they face due to the
severity of our crime situation. This allowance will now be extended to other members of the Protective
Services including the Fire and Prison Services, and the Defence Force.
Mr Speaker, these are only some of the highlights of a comprehensive national security plan and reflect
the priorities the Prime Minister and the Minister of National Security and the Government have placed
on confronting this challenge head-on.
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III. Strategy for Economic TransformationClaiming New Economic Space
Mr. Speaker, I turn now to the strategy for economic transformation. Over the years, a consensus has
emerged among economic analysts and practitioners that there are limits to the expansion of economic
activities, in a small open economy such as ours, largely due to the constraints of limited physical space,
small population, and few natural resources.
There are new areas of economic potential that remain undeveloped across the landmass of Trinidad and
Tobago, places like the North Coast, South-Western Peninsula and North-East of Tobago as well as in the
missing sectors that must be developed in areas like shipbuilding and repair, information and
communication technology, sports and medical tourism.
Here at home we have eternally spoken about diversification of the economy; yet other than the transition
from an oil-based to a gas-based economy, the structure of the economy has not changed. In essence
Government revenue and GDP growth are highly linked to developments in the energy sector, our
manufacturing sector remains constrained by the limitations of the CARICOM market and economic
activity in non-energy sector remains dependent on Governments ability to transfer the energy sector
revenue to domestic expenditure.
This year we will find or explore new physical, financial and investment spaces within which we would like
to see responses from the private sector, the labour movement and the state enterprises. Mr. Speaker, as
noted, the structure of the economy has not fundamentally changed despite the emergence of the dynamic
petrochemical and gas sector, what has changed however, is the skill set of this country. Trinidad and
Tobago now has more human resource capabilities in areas such as public administration, education,
health, business, financial services and information and communication technology.
In the Budget Statement of 2011, we began to spell out the specifics of opening new economic spaces
in our quest to develop five poles of expansion in the medium term. It is in this context that the Budget
Statement sets three strategic imperatives for the transformation framework:
1. Start the programme for change in the structure of the economy2. Embrace the challenge to enhance our institutional capability to deliver
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3. Alter the priorities of our expenditure to meet the basic needs of our people jobs, healthcare,
home ownership, security and education.
Mr. Speaker
We are implementing a series of structural reforms aimed directly at the modernisation of theState, particularly in the areas of public administration and public financial management.
We shall strengthen Governance and Human Resource Management in the Civil Service. This willrequire a sustained effort at developing a culture of efficiency in customer service in all Ministries,
Departments and Agencies.
We will accelerate the use of Information and Communications Technology across the PublicService to improve decision making and to deliver quality service to the citizens of Trinidad and
Tobago.
We intend to reform the management and preparation systems of the Public Sector InvestmentProgramme. The PSIP has been redesigned to improve efficiency and accountability of public
expenditure, the alignment between resource allocation, the Governments growth objectives and
the quality of service delivery to the population.
We will establish in 2012 a Public Financial Management Modernisation Unit, to manage theproject development activities associated with the implementation of new financial management
systems. The implementation of the programme covers a range of activities, including
strengthening the budgeting process, treasury management, and the creation of an Integrated
Financial Management Information System, with an aim towards the introduction of results based
budgeting by 2013/14.
We will strengthen the capabilities of the Central Statistical Office to ensure that it meetsinternational standards and can provide almost real time statistics.
We will improve and strengthen public debt and cash flow management within the Ministry ofFinance with the technical assistance of the World Bank.
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During 2012 we will enhance our consultations with all stakeholders with a view to ensuring thatour Medium-Term Economic Plan has broad national support.
The 1984 National Physical Development Plan will be revised and updated to accommodatecurrent and future challenges.
We will complete a land use policy during the course of this fiscal year which would includeallocation of lands to support business growth in areas targeted for strategic development.
Mr. Speaker, we will intensify our efforts to improve the regulatory and administrative frameworkto encourage private sector investment, to promote growth and to enhance employment.
Improving the Regulatory Environment for Private Sector Activity
Mr. Speaker, the Computerized Customs Management System, ASYCUDA system will come into effect in
fiscal 2012. This will be integrated with the Single Electronic Window which will improve the ease of
doing business in Trinidad and Tobago and our competiveness.
The Government, having recently paid off most of the arrears outstanding to VAT claimants, will put
measures in place for VAT refunds to be paid on a timely basis. We will also take measures to alleviate the
burden imposed on offshore activities in the oil sector by the current VAT arrangements.
The Government will introduce in fiscal 2012 an e-payment system for the payment of taxes and duties on
both incomes and goods.
The Joint Select Committee of Parliament will report on the Procurement Act, and appropriate legislation
will be laid in Parliament. Within 3 months of the passage of the legislation the regulations and guideline
will be approved and the new structure will be geared to encourage e-tendering and web site availability
for the processing and awarding of tenders.
The Government intends to modify the Insurance Act to strengthen the regulatory environment in the
sector. This will ensure that high-risk leveraging will not be repeated and public confidence in the stability
of the financial sector and in the strength of its regulatory framework will be increased.
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Mr. Speaker, we envisage that the above measures will enable greater efficiency in the operations of the
private sector and urge them to seize the opportunity to broaden the economic space in which they now
operate. The World Economic Forums Global Competitiveness Report, 2010/11, ranks Trinidad and
Tobago at 81 out of 141 countries. As a country we have to do better. We are doing our part to remove
any administrative and institutional handicaps that contribute to this outcome; we expect the private
sector to do the same.
Looking Outward
Mr. Speaker, in our strategy for economic transformation we must look outward to the region and Latin
American economies for access to their markets and for the use of our local services in their own
development thrust. Already, we have secured healthy positions with respect to our financial service
sector, for our presence in the region has been well established, but we intend to go further to seekopportunities in the capital market of the region and so provide financial returns to the country. To this
end, we have challenged the International Finance and Business Company to promote Trinidad and
Tobago as a place for financial activities as well as investment design and construction services and
investment and trade.
As an incentive Mr. Speaker, we in the Government will seek to offer our services with respect to
facilitating market penetration and market access for our private sector to sell and market its skills abroad.
Wherever we can, we shall open doors, bring parties together, facilitate communication, and initiate anyactivity that we deem both prudent and possible, to promote the exports of the skills of our citizens.
Mr. Speaker, notwithstanding the emphasis on changing the direction of the economy we must as a
priority address the basic needs of our people in health, education and housing. We must encourage
productive activity in the areas of agriculture, tourism, sports and culture. We need to undertake these
activities while protecting our environment and the safety of our citizens. I shall now turn my attention to
these matters.
Meeting the Basic Needs of Our People
Health servicesWith respect to health services Mr. Speaker, we intend to continue expanding our healthcare to all areas of
Trinidad and Tobago. A new programme for developing of our hospitals is being finalized, which will
include the new Childrens Hospital and repair and upgrading of our current health and hospital
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facilities.The San Fernando Medical Complex, which has already begun, with the conversion of the
Chancery Lane Building into a medical facility, will be expanded to include the Naparima Medical
Academy.
Mr. Speaker, the accountability and quality of healthcare will be further enhanced with the soon-to-be
established Accreditation Council to certify best practice standards. We will also implement the Health
Information Management System throughout the health sector to ensure the rapid transmission of patient
information while preserving confidentiality.
We will continue to support access of our most vulnerable patients to medical procedures and medication
under the Financial Assistance to Necessitous Patients Programme and the Adult Cardiac Surgery
Programme.
Education and GATEMr. Speaker, a high-quality education for our citizens is critical to our economic future. The GATE
programme was expanded in 2011 to include technical and vocational training. A further review will be
informed by the findings of studies undertaken by the Centre for Workforce Research and Development
funded through the European Development Fund under the aegis of the University of the West Indies.
The study will identify the skills gaps within the local economy, thereby guiding education and training
needs that are aligned with labour market information.
Mr. Speaker, the GATE programme will now be subject to more rigorous pay-for-performance rules with
respect to students to ensure value for money spent and greater accountability will be required from the
institutions that are registered in this programme.
o The Seamless Education SystemMr. Speaker, the Seamless Education System is a multi-phase project. The first phase of this project will
improve equity, quality and relevance of educational services provided to all children in Early Childhood
Care and Education, and in primary education.
o Partnership with Higher EducationMr. Speaker, the public and private partnership in education would include our higher educational
institutions as a source of valuable expertise and competencies. Mr. Speaker, as a start, we endorse the
collaboration by University of the West Indies, the Arthur Lok Jack Graduate School of Business, and
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their proposed collaborative effort for a growth initiative with private enterprises to help expand to new
markets outside of the CARICOM and develop new products.
Housing and Home OwnershipMr. Speaker, there is no doubt that housing is a critical component to the quality of life for our citizenry,
and as such, the Government remains fully committed to the provision of quality housing to our citizens.
At present, there are 129,000 applicants on the waiting list of the Housing Development Corporation
database. Approximately 80 percent of the empty housing units are currently under repair because of
questionable work done by contractors. In fiscal 2012 we have targeted 4,450housing units for
completion.
Mr. Speaker, in order to encourage home ownership, in particular for first time owners, the Government
had reintroduced last year a tax allowance of $18,000.
In January this year, the Government extended the subsidised interest rate of 2% to be accessible through
all financial institutions for the purchase of HDC houses, thereby increasing the number of persons using
that facility.
Mr. Speaker, we are also making home ownership more affordable to the middle income groups.
Government has decided through the Trinidad and Tobago Mortgage Finance Company Limited to
provide mortgages at reduced interest rates. Mortgage rates which are currently at 6 to 8 percent will be
reduced to 5 to 7 percent. This will benefit over 13,000 homeowners and will become effective during
2012. This mechanism will be reviewed annually.
Mr. Speaker, with respect to delivery of housing units, we have acknowledged the concerns and anxiety
of citizens whose applications for housing under the Governments housing programme have been at the
HDC for more than ten years. To alleviate this situation, long standing applications are given priority for
housing distribution.
The Government is currently exploring the introduction of a new programme entitled Land for the Landless
to provide greater opportunities for home ownership. The Government will give successful applicants a
foundation base and the opportunity to construct a 2 or 3 bedroom unit. We believe as many as 10,000
applicants will benefit from the program annually thereby allowing successful citizens to ease the 25 to 30
year debt burden associated with home ownership.
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Mr. Speaker, our Neighborhood Upgrading programme is designed to improve the living conditions of
low- and middle-income groups by regularizing tenure in squatter settlements across the country. The
main components include Squatters Regularization, a new housing and home improvements subsidy and
Sector and Institutional Strengthening. In addition, we will finalize the title regularization for
approximately 3,000 beneficiary families and relocate families where regularization is not feasible.
Mr. Speaker, the home improvement subsidy was raised last year from $10,000 to $20,000 per beneficiary
household, to be used for home repairs, expansion and renovation, with the emphasis being on improving
family health and safety.
The new home purchase or construction subsidy will be up to a maximum of $50,000 per eligible
household for homes costing $200,000 in Trinidad and $220,000 in Tobago.
Improving Physical Infrastructure
TransportationMr. Speaker, during the course of this year we will unveil an alternative transportation system. Feasibility
and design studies will commence shortly to establish a modern system of urban transportation involving
a system of park and ride facilities, inner city bus service, and a Bus Rapid Transit System. The Bus Rapid
Transit will service routes along the East-West Corridor and from the East-West Corridor to San
Fernando.
In addition Mr. Speaker, in addition to the ongoing construction of the highway from San Fernando to
Point Fortin the following new projects are proposed:
the construction of the San Fernando to Princes Town Highway, and commencement of designs aimed at improving the major intersections at the University of the
West Indies, Pasea, Macoya, Piarco, Monroe Road, Endeavour and Couva.
Mr. Speaker, we also intend to complete a comprehensive reform of the existing institutional and
regulatory structures that pertain to road sector governance, aimed at improving our efficiency in the
maintenance and construction of our road systems.
WaterMr. Speaker, the countrys water supply system suffers from major deficiencies related to high overhead,
inadequate tariffs, aging infrastructure, and a lack of adequate maintenance.
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Mr. Speaker, the Government will focus on improving the operational efficiency and financial
sustainability of WASA on rehabilitating and expanding the wastewater system, and on improving the
sustainability of the wastewater and water systems.
Expanding Agriculture and Tourism
Agricultural InitiativesMr. Speaker, boosting agricultural output is a central plank in the efforts of the Government to improve
employment, keep inflation low and stable, and grow the economy.
Mr. Speaker, this year the Government initiated the Agricultural Incentive Programme aimed at assisting
local farmers in overcoming the major challenges faced in the sector. The Programme provides support
to farmers in the form of percentage rebates on the cost associated with the purchase of irrigation
equipment, land preparation, pest management, and post-harvest marketing. There are also incentives to
encourage youth in agriculture, for fisheries, the provision of security in the agricultural sector, and for
agro- processing.
Mr. Speaker, the Agricultural Development Bank is playing a role in this initiative. The interest rates at
the ADB have been reduced to between 3 to 5 percent down from 5 to 8 percent and this has resulted in
an increase in credit demand of approximately 50 percent. These interest rates will be further reviewed in
the new fiscal year.
Mr. Speaker, the Government is also encouraging the use of greenhouse technology. The Trinidad and
Tobago Agri-Business Association has been charged with increasing greenhouse agricultural production
and marketing and will include greenhouse vegetables in its contract production programmes.
Tourism Action PlanMr. Speaker, the Governments Tourism Action Plan highlights five key focus areas:
product development, marketing and public awareness, competitiveness and investment safety, security and access, and quality assurance.
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Mr. Speaker, this comprehensive tourism thrust will generate high quality jobs in the industry. It will also
encourage investments from internationally branded hotel chains that have proven track records, and will
also facilitate the participation of owners of small accommodation properties in the development of the
tourism sector.
Mr. Speaker, sustainable tourism requires adequate infrastructure for not just accessibility to tourism sites
and attractions but systems to protect the fragile environment of many of the attractions, such as nesting
sites of turtles and coral at the Buccoo Reef. As we seek to revise and update our investment incentive
packages in the sector we shall concentrate on those incentives best suited to encourage sustainable
development of both the product and the environment.
Respecting the Environment
Mr. Speaker, sustainable economic and human development is not possible without respect for the
environment.
We will continue to work towards finalizing the Beverage Containers Bill to give effect to the reuse
and/or recycling of waste containers, and to discourage the unsanitary and environmentally degrading
practice of disposing of empty beverage containers in the environment. The Beverage Containers Bill will
assist in the establishment of a Recycling Industry in our nation.
Mr. Speaker, the Government has recognized Environmental Education as one of the core tenets in
achieving sustainable development and this is entrenched in the National Environment Policy of Trinidad
and Tobago. We propose to make resources available for environmental education from primary school
age to adulthood as well as public awareness on environmental issues.
In this regard, following upon my last Budget Statement, in order to optimize the objectives of the Green
Fund, the legislation governing the Fund was amended to allow Non Governmental Organisations
incorporated under the Companies Act, to be included as Non Profit Companies to be eligible to access
the Fund.
In addition, the Green Fund legislation provided for organizations and community groups which include
remediation, reafforestation and conservation of the environment in their portfolio of projects, to qualify
for assistance from the Green Fund.
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This fiscal year, Government proposes that the categories of activities eligible for access to the Green
Fund will be broadened to include environmental education and public awareness on environmental
issues.
This would require a simple amendment to Section 64 of the Miscellaneous Taxes Act, Chap. 77:01.
Addressing Youth, Sports, Culture and Gender Issues
Mr. Speaker, youth unemployment is distressingly high, exceeding fifty-five percent at June 2010. We are
actively addressing this issue. We will upgrade the Youth Development and Apprenticeship Centres to
increase the intake of students as well as to further engender the shift from welfare practices to one of
self-reliance and empowerment. Three centres will benefit from this ongoing initiative in the coming
year Persto Presto, Chatham and El Dorado.
SportWe will continue to maintain and improve the sporting infrastructure in our nation. In addition, three
state-of-the-art mega sport facilities will be constructed in compliance with international standards the
national cycle track, the national aquatic centre and the national tennis centre.
The Government has developed a 2-year programme which will engage young people in full-time sport
training programmes. This programme, called LIFE-Sport, is intended to train persons in sport and social
skills, as well as in life skills through occupational skill training. This programme will be piloted in ten
different communities throughout Trinidad and Tobago.
CultureMr. Speaker, the Government initiated a number of projects to reflect our nations rich heritage, to
support and promote our multicultural society, and to celebrate our diversity.
Mr. Speaker, the Government, through the National Museum, has made significant progress on the
establishment of a National Hall of Fame. The Museum is currently working towards the development of
a Portrait Gallery which will be the foundation for the Hall of Fame. The establishment of the Remember
When Institute will facilitate and manage the House of Music among other heritage related projects such
as the Evolution of the Steel Pan Exhibition and the recreation of Port of Spain as a Museum City.
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We are confident that these projects will safeguard our traditional knowledge and facilitate meaningful
contribution to an archive of indigenous culture and folklore for our citizens.
Mr. Speaker, we will further develop our human capital in the arts and culture by developing projects that
enhance the link between our pan yards and local communities. These include:
The Music School in the Pan Yard project, which trains participants in music literacy and amix of steel pan and two other musical instruments
The Art of Success project, which is a mentorship workshop series that will facilitateknowledge transfer from esteemed professionals and
The establishment of the high level panel for culture and arts to make recommendations.
GenderMr. Speaker, gender inequities can severely impede the social and economic transformation of an
economy and we shall seek to redress all forms of gender discrimination in this society. The Trafficking in
Persons Act (2011) was assented to in June this year; and gives effect to the United Nations Protocol to
prevent, suppress and punish Trafficking in Persons, especially women and children.
Mr. Speaker, to support womens participation at the leadership level in the country, we have ensured
that women are adequately represented on state boards and statutory authorities. To date thirty-one
percent of directors of state boards are women, compared to twenty-six percent of the previousadministration, and our target is forty percent.
Managing Our Social Safety Net
Mr. Speaker, in Trinidad and Tobago poverty is estimated at 17 percent of the population with the level
rising to 30 percent in some geographic areas. These are totally unacceptable figures and the Government
has targeted a reduction in poverty by a minimum of 2 percent annually through rehabilitative and skill
enhancement initiatives.
The Poverty Reduction Programme has allowed persons-at-risk to undertake micro projects; this is
facilitated by providing financial support to community-based and non-governmental organizations as well
as private sector entities for the purpose of supporting micro credit and entrepreneurship to small
entrepreneurs.
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Mr. Speaker, the Targeted Conditional Cash Transfer Programme provides social protection to our
citizens by promoting nutrition and food security while spearheading developmental activities through the
provision of training assistance in finding employment, budgetary planning, family planning and career
guidance. Additional focus will be placed on ensuring that individuals and families living in poverty or
who are vulnerable to falling below the poverty line are provided with the necessary support towards
attaining self-sustainability.
Mr. Speaker, we have expanded the Utilities Assistance Programme through which financial assistance is
provided to lower income customers of WASA and T&TEC by way of subsidies, in order to ensure their
continued access to basic utilities, water and electricity. In 2012, the Utilities Assistance Programme
intends to reach a total population of 11,268 householders who are customers of WASA and TTEC. We
will ensure that those persons who are most in need have access to this subsidy.
Mr. Speaker, the first ever World Report on disability produced jointly by WHO and the World Bank
this year, contends that differently-abled persons experience worse socioeconomic outcomes and poverty
than persons without a disability.
Here in Trinidad and Tobago, equal rights of all persons with disabilities must be respected.
Government will continue to take special care of our differently-abled citizens so that they could live
independently and participate fully in all aspects of life. We intend to add the following measures to the
current programme:
Grants will be paid to single mothers who are the sole caregivers of a special child and where thehousehold income is inadequate to support the family
Individuals who are differently-abled will automatically qualify for food support under the FoodCard Programme
All persons with a disability will be able to access free transportation on the Public TransportationSystem. Specially designed buses for the differently-abled will be made available
Families with a child who is disabled will automatically receive food support via the TT FoodCard and
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All disabled persons who wish to further their education or wish to enter the labour market viabusiness development training will benefit from a scholarship of $5,000.00 under the RISE UP
Programme.
Mr. Speaker, Government recognises the critical role of Non- Governmental Organisations in our
society. For years, NGOs have been executing grass roots initiatives that respond effectively to the
realities of local communities.
The State as well as kind individuals and corporate entities have been providing financial and other
support for the excellent work carried out by these NGOs. However, in order to encourage the corporate
sector and individuals to substantially increase their contribution to NGOs, appropriate legislation will be
amended, in line with international standards and introduced for such contributions to be clarified as tax
deductible expenses.
Tobago Development
Mr. Speaker, the Government is committed to working with the Tobago House of Assembly and other
stakeholders in the development of the future of Tobago paying due regard to the operation of Act No.
40 of 1996. In addition, the new Ministry of Tobago Development has added new opportunities as part
of its imaginative thrust for securing the future of the people of Tobago.
Mr. Speaker, the slowdown in the global economy has significantly affected the Tobago Tourism Sector
and its capacity to continue to be the primary private sector driver of development on the isle.
The Peoples Partnership Government understands the consequences of seeing a 60 percent decline in
Tourist arrivals to Tobago between 2005 and 2010. Those effects would be felt almost in every facet of
the islands economy, from the fishermen in Charlotteville, to the taxi drivers in Crown Point and to the
businessmen in Scarborough.
The Government will work with the THA to ensure that Tobagos tourism product is appropriately
positioned for growth. Key to this repositioning is the roll out of the stakeholder developed Tourism
Action Plan to be implanted over a 15 months period which will provide financial incentives for investors
in the industry.
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Mr. Speaker, the Tourism Development Fund is now set at $100 million. This Fund will also contribute
significantly to the sustainability and quality of the Tourism product in Tobago. The Fund is designed to
provide a Government guarantee to be accessed by both existing hotel properties as well as new property
developers. Similar consideration is also being given to our private business sector partners in Tobago, on
the advice of the Tobago House of Assembly, as we consider a range of initiatives to support the Tobago
Economy through this period.
Mr. Speaker, the Magdalena Grand Beach Resort, formerly the Hilton Hotel, has been mandated to work
with Tobagonian farmers and fishermen to provide the food needs of the Hotel. This will be the
recommended innovative model for all of Trinidad and Tobago with respect to greater purchase by hotels
and restaurants of locally produced food.
Mr. Speaker, primary to the development of a stable, private sector driven, economic base for Tobago isthe transformation of many of the necessary institutions and approaches that impinge on the islands
human capital. The Government in conjunction with its Tobagonian partners will construct the integrated
University Campus in East Tobago. This campus will integrate the campuses of UWI, UTT and
COSTATT in Tobago. The location of this campus in East Tobago will signal the end to the need for
Tobagonian students to travel to Trinidad in search of tertiary education opportunities.
In the West of Tobago the Government intends to conclude the acquisition of the Friendship Estate in
order to pursue the development of an energy bridge between Tobago and Trinidad with all the related
economic advantages of such a project redounding to the benefit of the all Tobagonians.
We are also supporting Tobagos need to enjoy the benefit of a free zone, and will shortly bring enabling
legislation to this House.
An initiative which began in 2001, the Scarborough General Hospital is finally to be delivered to the
people of Tobago in time for Christmas this year.
Mr. Speaker, the total budgetary allocation for the Tobago House of Assembly for fiscal 2012 is $2,199
million dollars, of which $1,861 million for recurrent expenditure and $319 million for capital
expenditures.
Mr. Speaker, Tobago will also receive an additional $510 million under various other Heads of
Expenditure.
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Mr. Speaker, the Government will honour its pledge for constitutional reform leading to full internal self-
government for Tobago. Most of the ground work has already been laid and a frame work that will allow
this period of consultation to culminate in real legislative action is now being worked on at the level of the
offices of the Prime Minister and the Chief Secretary. Mr. Speaker, the Budget has sought to respond
positively to the Tobago House of Assemblys request as well as the Ministry of Tobago Development. In
this regard, we will make every effort to ensure that monies allocated are spent expeditiously and for the
purposes so identified.
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IV. Strategy for Growth, Trade and InvestmentOur Investment Platform
Mr. Speaker, growth is at the heart of our economic development and the State has a pivotal role to play
in building partnerships in new growth initiatives. Our goals are to expand the economy and change the
direction of economic growth.
Last years projection of positive economic growth did not materialize. The Central Statistical Office
anticipates for calendar 2011 a 1.4% contraction in the economy. However, the GDP per capita at current
prices increased from US$16,016 in 2010 and is estimated to be US$17,231 in 2011.
Mr. Speaker, our growth initiatives are expected to increase output, incomes and employment. Ourstrategy is to generate new investments, re-energize the energy sector, facilitate private sector investments
and encourage new financing for private/public sector initiatives.
Mr. Speaker, the 2012/2014 Investment Platform for Trinidad and Tobago is predicated on new
investments in:
Traditional energy Downstream industries
Alternative and Renewable Energy Maritime Economy Urban development Infrastructure ICT Platforms Environments promoting business competitiveness Capital Market Development and Creative Industries
New Investment in Energy
Mr. Speaker, since 2006, this country has incurred a loss of approximately 30.0 percent in crude output
and condensate as well as more recently, the plateauing of gas output. We are seeking to attract
investments to make up the gap and to expand our industrial base. We would nurture new industries and
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extend our economic reach beyond the CARICOM Single Market Economy to the rest of the world. We
are concentrating on the generation of high-value output to replace similarly-lost crude output and we are
focusing on the several integrated energy-based manufacturing industries.
Mr. Speaker, Government has also embarked upon renewable energy and energy efficiency initiatives
aimed at climate change mitigation and the enhancement of national development. We have begun work
on the National Energy Policy, with the development of a Green Paperbased on local consultations held
earlier this year which would govern renewable energy and energy efficient practices, and the utilization of
compressed natural gas in the transportation sector.
The Government will also develop a local Sustainable Energy Programme, establish an energy regulatory
framework to promote sustainable energy, maximize the efficient production and use of fossil fuels, and
mobilize investment in renewable energy and energy efficiency.
Mr. Speaker, the Government anticipates that in 2012 some US$2.5 billion would be spent in the energy
sector on ongoing and new projects. Additionally, petrochemical companies would add another US$1.4
billion in new downstream projects in 2012.
First is the AUM 2 project, which would produce melamine. We anticipate that the domestic production
of melamine will provide the basis for melamine derived industries including those producing plastics,
adhesives and laminates. This facility has an estimated capital cost of US$1.9 billion and will create more
than 3,000 jobs during the construction period and 450 permanent jobs on completion.
Secondly, there is the CariSal project. Government in conjunction with the US firm CariSal will construct
a plant to produce calcium chloride, caustic soda and other related products for the domestic market as
well as markets in the Caribbean, North America, West Africa and Latin America. Construction of the
CariSal plant would begin in 2012, at an estimated cost of US$430 million, with the potential to create
more than 200 jobs during construction and operation.
Mr. Speaker, as we look to the period 2012 2015 and beyond, we see the prospects of developing a
number of new projects in the energy sector. Significant interests have been expressed by investors in
these projects and negotiations are taking place. If they were to materialize, we would anticipate a further
injection of investments of approximately US$5 billion during this period. These projects are:
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2. Methanol to Polypropylene project;3. Methanol to Acetic Acid project;4. Maleic Anhydride project; and5. Melamine derivatives projects.
Mr. Speaker, by the end of this decade, our country would have in place a well-established and high-value
manufacturing sector generating good quality jobs and providing our citizens with a good standard of
living and general prosperity. Moreover, we would have taken substantial steps in replacing our lost
output of crude and ensuring that our economic growth remains stable and sound.
Alternative Energy Development
Solar Manufacturing ComplexMr. Speaker, the Government proposes to seriously commence work on a Solar Industrial Development
Plan, building commercial possibilities based on solar energy namely silicone, glass and integrated
photovoltaic manufacturing industries. Based on preliminary assessment, there appears to be great
commercial potential in developing such a cluster.
National Wind Resource Assessment ProgrammeMr. Speaker, the Government will commission a national energy efficiency study and pilot project and a
National Wind Resource Assessment Programme.
New Maritime Economy
Mr. Speaker, there is an opportunity for the Government to play a catalytic role in the development of
Trinidad and Tobago as the regional ship building and ship repair centre. We are today considering ways
in which we can attract joint ventures with the requisite finance, skill and experience to make the necessary
investments to create a ship building and repair industry, with the potential to generate high skilled quality
jobs.
o Regional Fast Ferry ServiceMr. Speaker, the Government has recognized the need to introduce a Regional service, between Trinidad
& Tobago, Grenada, St. Vincent, St. Lucia and Barbados to improve the movement of persons and cargo.
It is anticipated that these will be private sector initiatives and the Government will encourage proposals
to make this happen.
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Urban Development
Invaders BayMr. Speaker, significant interest has been expressed in the transformation of the waterfront along
Invader's Bay. This development has great potential for promoting commercial activities in the services
sector and will benefit the country significantly. Such projects are meant to be private sector initiatives
utilizing green building technologies and will assist in making Trinidad and Tobago an attractive
destination for new investments.
Sustainable City Project East Port of SpainOver the years, numerous development initiatives in East Port of Spain have not achieved their goals and
the community has grown wary of these efforts, particularly those which do not involve the community in
decision making.
This is the reason why in last years Budget, we announced the Heritage City Initiative as a mechanism to
leverage the cultural and built heritage assets in East Port of Spain to improve the economic health of the
area.The history of East Port of Spain, Mr. Speaker is the history of Trinidad and Tobago.
This project is being developed in partnership with the East Port of Spain Council of Community
Organizations, the Caribbean Network for Urban and Land Management at UWI, the East Port of Spain
Development Company, and other key stakeholders. This exercise has also engaged the Making Life
Important Initiative of the Ministry of National Security.
The Mayor of Port of Spain is an essential sponsor to this project and has been involved with the ongoing
negotiations with the Inter-American Development Bank through the Ministry of Finance.
This initiative, is part of a wider Emerging and Sustainable Cities Initiative supported by the Inter-
American Development Bank of which Port of Spain has been chosen as one of the five pilot cities from
170 eligible cities in the hemisphere.
The project involves the Restoration of Fort Picton in Laventille which is in close proximity to the Lady
of Fatima Church, Desperadoes Panyard and Churucca's Observatory. It was at the Observatory that the
first accurate meridian in the New World was fixed. These represent heritage sites, which will attract local
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and foreign visitors and would facilitate employment creation. Support will also be provided to
community theatre groups for historical re-enactments.
ChaguaramasMr. Speaker, the Chaguaramas Development Authority is spearheading development in the North-
Western region and a master plan detailing land use proposals for that region will soon be subject to
public discussion. This will include capital development projects in the areas eco-tourism, park and
recreation development, the development of a cruise ship complex, and resort facilities.
New Infrastructure -Public and Private Partnerships
In the Global Competitiveness report 2010, the quality of our overall infrastructure was ranked 53rd out of
134 countries and within Trinidad and Tobago, our inadequate infrastructure was ranked the 6 th most
problematic factor out of the fifteen identified criteria for ease of doing business.
Mr. Speaker, in order to increase our capacity to develop additional infrastructure, our Government has
established a Public Private Partnership Unit in the Ministry of Finance. The general model is that the
Government will establish relationships with private sector entities which would introduce resources and
expertise into infrastructure projects. This development of Public Private Partnership will be done in
collaboration with the Ministry of Trade and Industry.
Mr. Speaker, in addition we will partner with local businesses to ensure that we buy a larger percentage of
goods and services locally.
CNG InfrastructureMr. Speaker, Government will embark on an ambitious programme for expanding the use of
Compressed Natural Gas as an alternative vehicular fuel. This is part of our overall strategy to reduce the
use of petroleum products and so reduce the size of the fuel subsidy. We are also implementing special
measures to encourage the construction of multi-fuel stations to dispense Gasoline, Diesel and NaturalGas. Already, seven new sites have been approved for the construction of such stations. This is in
addition to the existing 9 CNG station that are in operation. Applications for stand-alone CNG retail
stations in other parts of the country are currently being reviewed.
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Mr. Speaker, in order to encourage the use of CNG, Government is exploring the conversion of the
PTSC fleet to use CNG and certainly, with respect to new purchases of buses to insist that this facility be
put into place. Interest has been expressed by private enterprises to explore this conversion.
NIDCO and the Port Authority are being encouraged to convert existing vessels to use CNG as a fuel for
the water taxis and ferries respectively. This programme would not only have an impact on the fuel
subsidy but would also be environmentally friendly and cost effective. During this year, the Ministry of
Energy will embark on a communication plan to explain the benefits of such a programme to the citizens
of Trinidad and Tobago.
National Infrastructure BankMr. Speaker, the proposed establishment of the National Infrastructure Bank will be one of the most
significant economic initiatives of this Government. It would be a long-term financing institution,providing financing for capital expenditure for sound business projects that support the public sectors
wider aims in health, housing, transport, the environment, the knowledge economy and small and
medium-enterprises. The ultimate aim is to have a positive impact on the growth potential of the Trinidad
and Tobago economy. The Bank would borrow on the capital markets to finance these projects, thereby
freeing up public sector resources.
The Government will engage the services of the Washington-based World Bank affiliated International
Finance Corporation to assist in the development of a business plan for the governance and operations of
the National Infrastructure Bank.
In addition we will review the operations of the Export-Import Bank of Trinidad and Tobago with a view
to providing additional resources to make the institution more effective in the growth of the export sector.
Business Competitiveness/Ease of Doing Business
Mr. Speaker, the Ministry of Planning and the Economy is working out the technical details for
establishing an Innovation Financing Facility to assist in creating opportunities for research to be
converted into commercial activity. This effort will be complementary to the work currently being done by
the Caribbean Industrial Research Institute.
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Broadband InfrastructureMr. Speaker, the country wide deployment of Information and Communications Technology is a key
enabler of sustainable economic and social development in Trinidad and Tobago. This has been identified
in two of our seven pillars proposed for sustainable development, namely the quest for a knowledge
intensive economy and access to Information and Communication Technology.
Mr. Speaker, the Government will ensure that the un-served and under-served communities in Trinidad
and Tobago get the required access to the Internet. For this reason, citizens of Trinidad and Tobago need
a modern, accessible and affordable broadband platform to facilitate the use of ICT Services such as e-
Government, e-Health and e-Commerce.
Mr. Speaker, the Government in collaboration with the World Bank is preparing a strategic map to roll
out a nationwide high speed broadband network within two years. This project would require a financingplan for the backbone infrastructure, the details of which are still being negotiated.
Communications InfrastructureEvolving Technologies and Enterprise Development Company has completed the construction of the
communications infrastructure for a modern data centre which will serve Trinidad and Tobago and the
South-Eastern Caribbean. A strategic foreign investor is expected to commence construction on these
high-tech facilities within a month.
Capital Market Development
Mr. Speaker, in our last Budget Statement, we announced plans to rationalize various State-owned assets.
This programme has commenced. During the last year, a strategic local private sector investor joined with
the Development Finance Limited to float a new capital structure for that company and so encourage
financing of Small and Medium Enterprises. In addition, the state owned Vanguard Hotel Limited in
Tobago identified an operator for the Hotel, who immediately unveiled a new brand: Magdelena Grand
Beach Resort which would reposition the hotel to support development of air links to Tobago and to
introduce modern operational and management capacity.
Mr. Speaker, the Government will expand these public offerings in its continuing effort to improve the
efficiency of the state enterprise sector and enhance the domestic capital market. The first phase of the
programme would involve the securing of strategic investors for a numbers of state enterprises. In
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parallel, further public offerings will be made on the Trinidad and Tobago Stock Exchange. We would
offer to the national community further tranches of the shareholding of Government in:
Point Lisas Industrial Port Development Corporation Limited since this company is already listedon the Trinidad and Tobago Stock Exchange
Trinidad and Tobago Mortgage Bank - a merger between Trinidad and Tobago Mortgage FinanceCompany and the Home Mortgage Bank for which an Initial Public Offer (IPO) by the
Government will be made and
First Citizens Bank, for which an initial public offering will be made, but which offering will notaffect Government ownership of the Bank. It will assist the Bank in widening its capital base and
so facilitate its expansion programme in which the Bank is currently engaged.
Mr. Speaker, the Government is continuing with the technical work and due diligence exercises in the
remaining state enterprises. We envisage a second phase of the programme which would involve, where
appropriate, the implementation of further public offerings or the securing of strategic investors for some
of those enterprises.
Mr. Speaker, in the final analysis, all state enterprises would be modernized with best practice corporate
governance structures in their administration. We are ensuring through the modernization of our state
enterprises that the citizens of this country are provided with affordable, transparent and customer-focused services and an opportunity to share in the ownership of these enterprises.
Small and Medium Enterprises MarketWhile the public offerings programme would seek to revitalize capital market activity, our small and
medium enterprises continue to be over-reliant on bank financing. As a result we will work with the
Trinidad and Tobago Stock Exchange to create a third tier on the Exchange to provide Small and Medium
Enterprises with access to the capital market. The Trinidad and Tobago Stock Exchange would expand
its scope of operations as it establishes a SME Market. The recent Jamaican experience has shown what
can be achieved in countries where the circumstances for investing are even tougher. Participating voting
shares and other securities of eligible small and medium sized companies may now be listed for trading
purposes.
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Mr. Speaker, for the first 5 years SMEs whose capital is greater than $5 million but less than $50 million
and listed on the SME Market for trading purposes would be allowed a 10 percent corporation tax rate.
The SMEs would be required to raise capital on the stock exchange through an initial public offering with
a minimum of 25 shareholders holding at least 30 percent of the companys share capital. This initiative
will be reviewed every five years. We expect this tax incentive regime to encourage small and medium-
term enterprises to access resources from the capital market.
Regional Stock ExchangeMr. Speaker, the Government will take a fresh initiative to encourage the development of a regional
stock market going beyond the arrangement that has been arrived at by the Barbados Securities Exchange,
the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange. The Regional Stock Market
will provide important opportunities for the integration of the region and private returns and investment
opportunities for our citizens. This is consistent with our attempt to build regional buffers and willbecome an important institution for the integration model for the Caribbean in the future.
Mr. Speaker, it is now necessary to review the architecture of the Caribbean Integration Process and to
seek to build new projects integrating the natural mineral resources of the region. The Government will
initiate discussion with Caribbean countries to identify a new integration framework to facilitate this
process and to include the larger countries of the Hemisphere.
In Summary, Mr. Speaker, for fiscal 2012, in this budget statement we have identified a national
investment programme for which there are commitments from the public sector, the private sector and
the energy sector. This amounts to approximately TT$26 billion or 18% of the GDP and which will
contribute to the renewal of growth in the economy.
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V. Fiscal Measures
Mr. Speaker, I now come to the fiscal measures to support the broad and specific policies that have been
identified.
1. Job creation and Investment Incentives for Small and Medium sized businesses to access the Stock exchange.Mr. Speaker, small and medium enterprises are better served by raising capital on the domestic capital
market. For too long they have been relying on high cost commercial finance which has limited their
viability and expansion. In our efforts to assist the SME sector and at the same time strengthen the
domestic capital market we are proposing to encourage them to access the facilities provided by the
Trinidad and Tobago Stock Exchange.
SMEs with a minimum capital of $5 Million will be able to list on the TTSE provided that they have at
least 25 shareholders, holding at least 30% of the Share capital which must not exceed TT$50Million.
To encourage this activity, the Corporation Tax Act, Chap. 75:-2 shall be amended to provide for a
reduced Corporation Tax at a rate of 10% on taxable profits, for the first 5 years of operations.
2. Strengthen and Improve the Financial Sector Expansion of Deposit Insurance coverage.Mr. Speaker, a deposit insurance system is an important component in the financial system for protecting
depositors. Since the establishment of the Deposit Insurance Corporation in September 1986, the deposit
insurance coverage limit has been adjusted only once, in October 2007 when it was raised from $50,000.00
to $ 75,000.00.
Consistent with international best practice banking standards the Deposit Insurance Corporation will
increase its deposit insurance coverage limit from $75,000 to $125,000 for deposit holders of commercial
banks and non-banks licensed under the Financial Institutions Act 2008.
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Amendments to the Central Bank Act, Chap. 79:02.Mr. Speaker, the recent amendment to the Central Bank (Amendment) Act No.18 of 2011 (Amendment
Act) provided a means of augmenting the emergency powers of the Central Bank of Trinidad and
Tobago (the Bank) under its enabling legislation, by the creation of a stay of proceedings in instances
where the Banks emergency powers had been invoked.
In an attempt to preserve the rights of persons who may have a cause of action against an institution
which is under the emergency control of the Bank, the Central Bank Act, Chap. 79:02 will be amended as
follows:
To provide that, where an institution has been brought under the emergency control of theBank under section 44D, time shall cease to run in respect of any limitation period provided
under the Limitation of Certain Actions Act Chap 7:09 and
To stipulate that the running of time would resume upon the lifting of the stay ofproceedings in accordance with section 44E5(a) and (b) of the Central Bank Act, as amended
by the Central Bank Act No. 18 of 2011.
3. Broadening the Social Security NetAmendments of the National Insurance Scheme
Mr. Speaker, we seek to introduce changes to the National Insurance System that will broaden the
countrys social security net, particularly for the elderly, and at the same time contain the rate of growth in
expenditure for retirement income in our fiscal accounts. We seek to accomplish these goals by the
provision of the following:
Minimum guarantee monthly retirement pensionThe minimum pension benefit was increased to $3,000 for a vast cross section of persons in the Finance
Bill 2010. However, despite persons insured under the National Insurance System making contributions
via monthly deductions from their salaries, the minimum National Insurance retirement benefit remainedunchanged from the sum of $2,000. In order to bring equity to the system, the minimum National
Insurance retirement pension will be increased to $3,000 per month during fiscal year 2012.
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Increase in the insurable monthly income under the National Insurance
We shall increase the insurable monthly income ceiling from $8,300 to $10,000. This will help to fund the
increase in the minimum guaranteed pension indicated above. This measure will take effect during fiscal
2012.
Simplify National Insurance benefitsMr. Speaker, we intend to eliminate the complicated and timeconsuming benefit structure for
retirement benefits by moving from a fixed earning class and dollar figure to a percentage of salary. This
will be 1 percent of salary, up to a maximum of $10,000, for each of the insureds years of contribution. A
worker earning $10,000 per month, having contributed for thirty-one years, will simply be entitled to 1
percent of $10,000 multiplied by the total years of contribution., in this case 31, which will give him a
pension of $3,100 per month. This measure will come into effect during fiscal 2012.
Incorporate the Self-Employer into the National Insurance SystemMr. Speaker, in an effort to spread the coverage of our social safety net, we are seeking to include the
self-employed in the benefits under the National Insurance System.
Although self-employed persons fall within the National Insurance legislation, there are no arrangements
in place to govern the payment of contributions or benefits to be paid to such persons. Consequently,
there are approximately 115,000 persons who currently do not make any contributions to the NationalInsurance Board and so cannot access any benefits under that system.
The Government will engage in discussions with the National Insurance Board to ensure provision of
support to those persons who may encounter challenges in complying with the requirements of the
National Insurance System by virtue of their age or income.
Mr. Speaker, it is time to ensure that those persons who provide a significant contribution to the
development of our country and the welfare of our people, through their entrepreneurial activities and
artistry, are adequately taken care of in their later years.
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Waiver on Interest and PenaltiesMr. Speaker, we are proposing a waiver on the payment of penalties and interest on outstanding
contributions to the National Insurance Board. The proposed waiver is to be applicable until June 30th,
2012, provided always that:
all outstanding contribution payable by the employer to the board are paid before the expiry ofJune 30, 2012
the waiver shall only be available to employers, who are registered with the Board before October10, 2011, in respect of penalties and interest on contributions for insured persons registered as
their employees prior to October 10, 2011 and
the waiver only applies to penalties and interest payments which accrued before October 10,2011.
4. Energy Sector Measures New Petroleum Licences.Mr. Speaker, the Energy Sector continues to be the main driver of Government revenues and exports.
The expansion of this sector remains critical for ensuring the long- term growth of the economy.
However the administration of this industry must be efficient and effective if our citizenry is to obtain the
maximum benefit from the sector.
The licensing regime is the legal framework for administering and regulating petroleum operations. The
licences are issued under Regulation 3 of the Petroleum Act, Chap. 62:01. With the exception of
amendments introduced in 2009specifically for bunkering operationsthe licence fee structure has
remained unchanged since 1969.
Accordingly, Mr. Speaker we shall raise from $4,000 to $40,000, the fees for the following series of
licences in order to reflect a more reasonable cost of regulating the industry. The eight licenses are as
follows:
an Exploration Licence an Exploration and Production (Public Petroleum Rights) Licence an Exploration and Production (Private Petroleum Rights) Licence a Refining Licence
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a Liquefaction of Natural Gas Licence Transportation (other than by pipeline) Licence Marketing Licence
With respect to wholesale operations With respect to bunkering operations
a Petrochemical Licence
Marketing licences for retail transactionsMr. Speaker retail transactions at petrol filling stations have been increasing at a rapid rate. Accordingly,
we are proposing that the annual licence fee for each gas station be now based on the annual total sales of
all grades of gasoline and diesel for the immediate preceding year. .There would be three categories as
follows:
$1,000 for gas stations with annual sales of gasoline and diesel of less than 1,000,000 litres
$2,000 for gas stations with annual sales of gasoline and diesel in excess of 1,000,000litres butless than 5,000,000 litres
$4,000 for gas stations with annual sales of gasoline and diesel in excess of 5,000,000 litres
Marketing licences for peddling operations.Mr. Speaker, peddling operations refers to small wholesale transactions of less than 600 Imperial gallons
of refined petroleum products other than gasoline. This type of operation was prevalent in the past when
kerosene was used as the primary household fuel. Today, most peddlers operate road tank wagons in
excess of 10,000 Imperial gallons. We propose that peddling operations shall be renamed Authorised
Distributors and the current $50 licence fee for peddling operators be raised to $1,000.
Transport of gasoline and fuel other than by pipelineMr. Speaker, road tank wagons are also engaged in the transport of liquid petroleum products. We
propose to institute an annual licence fee of $500.00 on those engaged in the transport of liquid petroleum
products by road tank wagons and thatlicence will be granted subject to the inspection of the road tank
wagon.
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Licences for pipelines for natural gas transmission
Mr. Speaker, we intend to introduce a new licence for the transmission of natural gas, which will be
based on the carrying capacity of the pipeline, in the following manner:
Line capacity greater than 100 MMcf/d $40,000 Line capacity between 2 and 100 MMcf/d $10,000 Line capacity less than 2 MMcf/d $5,000
Compressed Natural Gas Licence
We shall also adjust the fees with respect to licences in respect of servicing, marketing or consumer
refueling of compressed natural gas. The annual fees will be adjusted in the following manner:
CNG Service licence$2,000, currently $1,000, CNG Marketing Licence$2,000, currently $1,000 CNG Consumer Refueling Licence$.10,000, currently $5,000
Mr. Speaker, the increased fees relating to Marketing Licences for gas stations, peddling operations and
CNG service, marketing and consumer refueling operations, licences for transportation of liquid
petroleum product and pipeline licences will take effect from January 1st, 2012.
Changes in Penalties under the Petroleum Production Levy and Subsidy Act
Mr. Speaker, we propose to increase the penalties for breaches committed under two provisions of the
Petroleum Act as follows:
1. Any person who contravenes section 6 (2) of the Petroleum Act shall be liable to a fine, onsummary conviction, of $300,000 up from $30,000, and in the case of a continuing offense, a
further $5,000 per day up from $1,500 while the offense continues.
2. Any person who contravenes the rules or regulations under section 29 (7) of the Petroleum Act
shall be liable to a fine, on summary conviction, of $150,000 up from $15,000, and in the case of a
continuing offense, a further TT $3,000 per day up from $300 while the offense continues.
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Mr. Speaker, the provision of subsidies is an important strategy for containing transportation and energy
costs of the industrial and agricultural sectors. The cost to the country could be as much as $3.5 billion per
annum - depending on oil prices. Mr. Speaker this subsidy has been subject to abuse. We propose the
following as a deterrent to this practice.
Mr. Speaker, a person caught in such illegal activity at present pays a fine of $10,000. Therefore in an
attempt to curtail such practice, we propose to increase, this fine in respect of any person caught
exporting or attempting to export for sale by retail petroleum products as follows:
$150,000.00 for volumes under 40,000 litres $600,000.00 for volumes greater than 40,000 but less than 160,000 litres $3,000,000.00 for volumes in excess of 160,000 litres
Mr. Speaker, we also propose to raise the fine for persons who fail to pay the levy for the purpose of
subsidizing the product prices from $10,000.00 to $